Whether it be insurance, pensions, securities, banking, moneylending, general consumption, insolvency, or the restoration of credit, Jamaica has a slew of laws, regulations and regulators that form a strong shield of protection for the consumer.
The Financial Services Commission (FSC) is a broad tent for the protection of the users of insurance, pensions and securities services. It is a creature of the Financial Services Commission Act, 2001, and is charged with protecting consumers by regulating and supervising non deposit taking financial entities. It sets and enforces standards of market conduct, promotes financial literacy to empower consumers, and provides a mechanism for addressing complaints, thereby upholding the rights of consumers.
The FSC ensures that only strong institutions and qualified people of integrity provide service to consumers. Institutions in the private pensions, securities and insurance industries must be licensed to operate and are subject to ongoing examinations. Maintaining soundness – or solvency – is a key requirement of each business in addition to operating according to legal requirements.
Licensees and their employees are required to meet the highest standards of conduct, which the FSC enforces consistent with the guidelines that it establishes and enforces. For example, the interests of clients should rank above theirs and conflicts of interest should be avoided. There are also rules about advertising, prompt and fair settling of claims, and the suitability of products and services to the needs of the consumer.
PROVISIONS FOR CONSUMERS
Regulated entities are also required to equip consumers to make informed and useful decisions by providing them with information about services, products, risks, fees and their obligations. At the same time, there are provisions for consumers to file complaints with the FSC against the licensees, which must also have their own complaint handling procedures and mechanisms.
To protect the consumer further, the FSC is vigilant in detecting and investigating entities that operate without a licence and has an arsenal of actions to take against even registered businesses and individuals that breach the relevant laws and regulations.
By way of example, the FSC regulates the private pension sector comprising employer funded pension plans, called superannuation plans, and individual retirement schemes. It provides for contributions to be locked in and sets investment limits for the integrity, financial health and effectiveness of the pension arrangement. Through its guidelines, it sets a limit on the percentage of the funds that can be invested in higher risk instruments like private and venture capital businesses. The pension funds are required to have investment policies, approved by the FSC, and the investment managers are required to manage the portfolios in line with the policy.
The Bank of Jamaica Act protects consumers by establishing a framework that ensures compliance with the Banking Services (Deposit Taking Institutions) (Customer Related Matters) Code of Conduct, 2016, which governs the relationship between deposit taking institutions and their customers. They are required to disclose information on their fees, charges, terms and conditions of contracts; to provide information on their accounts at a reasonable price; and to establish mechanisms to record and to effectively address customers’ complaints within set timeframes.
The Consumer Protection Act (2004), administered by the Consumer Affairs Commission, aims to empower consumers and promote fair trading practices, thereby protecting consumers and ensuring fair treatment. It provides a mechanism for redress and safeguards the rights of consumers through an effective grievance procedure for lodging complaints and which is accessible and fair.
It requires that businesses provide consumers with accurate and clear information on goods and services, including warranties and return policies, and that they refrain from misleading and deceptive conduct.
Financial institutions are required to disclose loan terms, interest rates and fees transparently, and are prohibited from unfair practices such as misrepresentation and fraud.
The Act requires businesses to issue receipts for the goods and services that they sell, showing amount paid, the date of the transaction, description of the good or service, any professional fee charged, and such other information that may be prescribed as well as the terms of any warranty. It prohibits conduct likely to mislead and deceive, false representation and unfair practices. There are legal penalties for violating the Act, and the court may order payment of damages or costs upon the conviction of a provider who commits an offence.
REGULATION FOR MONEYLENDING
The Moneylending Act regulates moneylending transactions ensuring the protection of borrowers and outlining the responsibilities of lenders. It establishes a legal framework to protect borrowers from predatory lending practices. It requires that contracts be in writing and signed by the borrower, with details such as the loan amount, interest rate and repayment terms. It includes provisions regarding the maximum interest rate that can be charged, and provides borrowers with legal recourse where there is non compliance by the lenders.
Falling on hard times does not mean the end for the debtor. The Insolvency Act, 2014, emphasises rehabilitation and, for example, individuals, like companies, can file a Notice of Intention to make a proposal within 30 days, aiming to restructure a debt and avoid bankruptcy. Also, generally, debtors can begin to restore their credit score by settling their debt, the major drawback being that it will remain on their record for seven years and thereby continue to affect their credit score for that time.
The government has the back of consumers through laws, regulations and regulatory bodies, but they must know about these protections to be able to benefit from them.
Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. Email: finviser.jm@gmail.com
